Answered: A company finds its actual sales during…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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A company finds its actual sales during the first, second, and third quarters to be 183.5, 162.3, and 141 respectively. The initial forecast for the first quarter was 350.3052 and the forecast obtained by the exponential smoothing method without trend adjustment gave sales figures of 176 for the third quarter. You are not given the forecast for the second quarter. Find the value of alpha.

Expert Solution

Step 1

Formulae used:

$F_{(t + 1)} = A_{t} \times α + (1 - α) F_{t}$

where,

$F_{(t + 1)} = F o r e c a s t f o r t h e p e r i o d (t + 1)$

$A_{t} = A c t u a l d e m a n d f o r t h e p e r i o d t$

$α = E x p o n e n t i a l c o n s \tan t$

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